Libertarian Administrative Law

In recent years, several judges on the nation’s most important regulatory court — the United States Court of Appeals for the District of Columbia Circuit — have given birth to libertarian administrative law, in the form of a series of judge-made doctrines that are designed to protect private ordering from national regulatory intrusion. These doctrines involve nondelegation principles, protection of commercial speech, procedures governing interpretive rules, arbitrariness review, standing, and reviewability. Libertarian administrative law can be seen as a second-best option for those who believe, as some of the relevant judges openly argue, that the New Deal and the modern regulatory state suffer from basic constitutional infirmities. Taken as a whole, libertarian administrative law parallels the kind of progressive administrative law that the same court created in the 1970s, and that the Supreme Court unanimously rejected in the Vermont Yankee case. It should meet a similar fate. Two cases to be decided next Term provide an opportunity for the Court to repudiate libertarian administrative law.

The paper is well worth reading in full, and I am sure interested parties at the Supreme Court will do so over the summer.

Hostility to the administrative state is nothing new in the United States: see most recently Philip Hamburger’s, Is Administrative Law Unlawful? More broadly, however, the rising interest in libertarianism on the D.C. Circuit is paralleled by a rising interest in republican approaches to administrative law elsewhere in the common-law world. Civic republicanism and deliberative democratic approaches were fashionable in the U.S. in the 1990s, but the republican turn in common-law administrative law theory — as exemplified by T.R.S. Allan’s recent work, The Sovereignty of Law, Eoin Carolan’s The New Separation of Powers and some (I think) of David Dyzenhaus’s writings — draws more on the work of political theorists such as Quentin Skinner and Philip Pettit.

These theorists, reviving Thomas Hobbes, focus on liberty as freedom from the arbitrary power of another. Potential application to administrative law, replete with discretionary powers which could be exercised arbitrarily, is obvious. Indeed, republican administrative law might provide better explanations for two of the decisions discussed by Vermeule and Sunstein. Of the decision striking down performance standards set out by Amtrak and the Federal Railroad Administration as a breach of the nondelegation doctrine, they say:

Put in its best light, libertarian enthusiasm for the nondelegation doctrine can be explained in the following terms. Suppose that we believe (with Judge Brown, among many others) that a central goal of the Constitution is to safeguard private liberty, and to do so by constraining the influence of private factions. If so, then there is a plausible argument on behalf of the nondelegation doctrine as a way of achieving that goal. It might well be thought that by requiring members of Congress to surmount the difficulty of agreeing on a specific form of words, and by forbidding legislation that lacks such agreement, the nondelegation doctrine reduces the likelihood that law will be enacted at all.80 If national law itself is seen as potentially threatening to liberty, this constraint will seem appealing. A supplemental idea is that whenever Congress gives discretionary authority to the executive branch, it unleashes a risk of interest group capture. The safeguards that are built into the structure of the national legislature serve to reduce that risk. When Congress grants open-ended discretionary power to others, it allows those safeguards to be evaded.

A republican explanation is arguably even more plausible. Broad delegations of power increase the probability that unforeseeable or arbitrary decisions will be rendered, leaving the individual at the mercy of official discretion. Stricter requirements for valid legislation would, on the republican view, reduce the probability of arbitrary decision-making.

There is also a hint of republicanism in the D.C. Circuit’s approach in the Mortgage Bankers case (another one that is headed to the Supreme Court). Here the D.C. Circuit imposed a procedural requirement when the administrative agency wanted to revise an interpretive rule, due to a concern that interested parties had come to rely on the earlier interpretation:

What underlies that approach? What is motivating it? We cannot say that the answer is necessarily libertarian at a conceptual level. In the abstract, the Paralyzed Veterans rule has a degree of neutrality. If, for example, the Clinton Administration issued an expansive interpretation of the Fair Labor Standards Act, the Bush Administration would be forbidden to change it without notice and comment. But there is nonetheless a clear connection with libertarian principles. Largely out of solicitude for the reliance interests of regulated entities, who often have the most at stake when interpretive rules are changed, the court seems to be attempting to promote predictability and consistency on the part of agencies, prompting the court to impose on agencies a kind of stare decisis principle, even for their own nonbinding interpretations. The idea seems to be that because agencies exercise discretionary power, and are vulnerable to the power of well-organized private groups (the public choice problem), agency interpretations must be taken as binding at least on agencies themselves, until they are changed through notice and comment procedures. Though reliance on the part of the regulated class is not an independent requirement, it does seem to drive the court’s reasoning, as indicated that its suggestion that “regulated entities are unlikely to substantially — and often cannot be said to justifiably — rely on agency pronouncements lacking some or all the hallmarks of a definitive interpretation,” and hence “significant reliance functions as a rough proxy for definitiveness.”

Participation in the process of discretionary decision-making is a key tenet of (what one might call) republican administrative law theory (see especially Geneviève Cartier’s work) and, though this case involved corporate rather than individual interests, it is just the sort of situation in which a republican might think a process of dialogue with the decision-maker is an appropriate way to avoid subjecting the legal or natural person to the risk of arbitrary official discretion.

None of this is to suggest that either libertarianism or republicanism provides a “master-principle” of administrative law; I agree with the authors’ skepticism on that score (though question whether liberal democracy, however defined, might necessarily function as a “master-principle”). Moreover, the potential distinction between libertarianism and republicanism should not be overstated — in earlier work, Allan has heavily relied on Friedrich Hayek’s political philosophy and Carolan’s project is expressly to restore the separation of powers to its libertarian moorings — but it does suggest that the D.C. Circuit is not alone. Whether or not it is acting lawfully is another question, however, and Sunstein and Vermeule convincingly argue that it is not.